Southeast Michigan cities have lost millions of dollars in statutorily required revenue sharing since 2003 as part of a $6.2 billion raid on the fund to plug holes in the state budget.
The Michigan Municipal League, which released the report last month, is sharply critical of what it calls “the Great Revenue Sharing Heist,” and said that when the state changed the rules regarding revenue sharing to address its serious revenue shortfall, the problem was shifted to local communities.
Revenue sharing is a funding stream that local governments have come to count on remaining relatively stable, a cushion against property values that plummeted faster than cities could have anticipated and increasing retirement costs.
When the state took it away, municipalities were thrown into a state of financial flux, the League said. Some cities have have been able to better manage or entirely avoid current financing crises if they had received the $6.2 billion the state put in its own coffers.
“What is most shocking is the difference those revenue sharing dollars would have made at the local level,” associate director Anthony Minghine wrote in an article blasting the state for Municpal League’s magazine. “... We now have a record number of communities facing financial emergencies. It’s easy to blame local leaders, but you must consider all the facts. In most cases, communities that currently face large deficits would in contrast have general fund surpluses.”
Minghine opined that state officials “created most, if not all, of the financial emergencies at the local level.”
Bankrupt Detroit was hardest hit, losing out on a whopping $732 million during the decade from 2003-2013. Flint, also under emergency management is on the list, too. By the end of 2014, that city will have lost $54.9 million in promised revenue sharing funds.
Samantha Harkins, the Municipal League’s director of state affairs, said in a statement that Flint the revenue sharing money would have eliminated Flint’s $19.2 deficit, and allowed the city to pay off $30 million in bonds and still have a surplus of more than $5 million.
Among 11 Patch towns, Dearborn was ranked ninth among the 23 cities with more than $10 million in revenue sharing losses over the 10-year-period. Dearborn lost lost out on $31.3 million in revenue sharing.
Troy was ranked 12th, with losses of $20.9 million, Farmington Hills 13th with losses of $20.5 million, and St. Clair Shores 14th with losses of $17.3 million.
Affected Patch Communities
Birmingham, No. 30: $5.8 million
Brighton, No. 41: $2 million
Dearborn, No. 9: $31.3 million
Farmington Hills, No. 13: $20.5 million
Ferndale, No. 24: $9.8 million
Grosse Pointe, No. 44: $1.5 million
Northville, No. 43: $1.8 million
St. Clair Shores, No. 14: $17.3 million
Troy, No. 12: $20.9 million
Utica, No. 45: $1.4 million
Wyandotte: No. 23: $10.6 million
“You can look at pretty much any Michigan community and see where they might be today if the statutory revenue sharing had been fully funded,” Haskins said.
Gov. Rick Snyder says he plans to increase revenue sharing funding by 15 percent next year, MLive/The Lansing News reported earlier this spring.
That’s a good start, the Municipal League said, but that won’t undo years of economic damage after years of shortfalls.
That raises the question:
What do you think about the state’s management of revenue sharing funds? Tell us what you think in the comments.